Productivity Soars to Six-Year High

November 5, 2009

Wow! This is very good news.

Productivity surged in the third quarter at the fastest pace in six years while labor costs continued to drop sharply, a combination that will bolster companies' profits but leave workers with stagnant incomes.

The Labor Department said Thursday that productivity, the amount of output per hour of work, was rising at an annual rate of 9.5 percent in the July-September quarter, much better than the 6.4 percent gain economists had expected. Unit labor costs fell at a 5.2 percent rate.

It's clear what happens when everyone gets laid off–you make do with less. Strong productivity gains will ultimately delay hiring. Tomorrow's payroll report will be a big deal.

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